Florida Corporations

Question 1

Florida corporations are governed by what Florida Statute?

Answer 1

Florida’s Business Corporation Act.

Question 2

Florida’s Business Corporation Act is based substantively on what?

Answer 2

Based substantively on the Model BusinessCorporation Act as amended in 1984.

Question 3

What do Florida courts often rely on if no Florida case has addressed the question at hand?

Answer 3

On judicial precedent from other Model Act jurisdictions.

Question 4

What is a corporation?

Answer 4

A separate legal entity distinct from its shareholders.

Question 5

May a corporation generally exercise through its agents the same rights and privileges as a natural person?

Answer 5

Corporations may generally exercise through its agent the same rights and privileges as a natural person.

Question 6

What are the principal advantages of the corporate form?

Answer 6

Limited liability of shareholders for corporate obligations; centralized management; continuity of existence; ease of transferring ownership; and access to capita through the sale of shares.

Question 7

What is double taxation in florida corporation?

Answer 7

Double taxation is when florida corporate earnings paid to shareholders are taxed as income to the corporation and as income to the shareholder.

Question 8

How can small businesses avoid double taxation?

Answer 8

Small business corporations may avoid this by electing taxation under Subchapter S of the Internal Revenue Code.

Question 9

Under Subchapter S of the Internal Revenue Code, how are taxes assessed?

Answer 9

Taxes corporate income directly to the shareholders in proportion to their ownership.

Question 10

What must corporations qualified to do business in Florida file?

Answer 10

A annual report with the department of state.

Question 11

A corporation failing to file a mandatory annual report with the department of state what?

Answer 11

May not bring or defend an action in Florida courts until the report is filed and may be involuntarily dissolved.

Question 12

Each corporation qualified to do business in Florida must maintain what?

Answer 12

Must maintain a registered office and agent in Florida.

Question 13

What kind of powers are conferred upon all corporations to allow them to carry out their purposes?

Answer 13

Broad statutory powers.

Question 14

How may broad statutory powers conferred upon all corporations be limited or expanded?

Answer 14

Through the corporation’s articles.

Question 15

What are some of the broad statutory powers conferred on all corporations to allow them to carry out their purposes?

Answer 15

The power to hold property, enter contracts borrow money, lend money (except to outside directors) hold and vote securities, indemnify agents, and donate to charity.

Question 16

May corporations contribute to candidates for state or local office?

Answer 16

Corporations may contribute within limits to candidates for state or local office.

Question 17

May corporations expend funds to support or oppose ballot referendums or candidate for political office?

Answer 17

Corporations may expend funds as free as individuals i border to support or oppose ballot referendums or a candidate for political office.

Question 18

Corporations may expend funds as free as individuals in order to support or oppose ballot referendums or a candidate for political office so long as what?

Answer 18

So long as the spending is independent of a candidate.

Question 19

What basic two things are corporations liable for?

Answer 19

Their contracts and for torts committed by their agents.

Question 20

When may a corporation be held liable for punitive damages?

Answer 20

When an employee or agent angles in international misconduct or is grossly negligent and the corporation participates in or condones the conduct or is itself grossly negligent.

Question 21

What are ultra vires acts?

Answer 21

Ultra vires acts are those beyond the power of the corporation conferred b law or by a corporations charter.

Question 22

When did common law allow the fact that a particular act was ultra vires to be asserted?

Answer 22

As a defense by a corporation.

Question 23

Has the defense of ultra vires been abolished?

Answer 23

The ultra vires doctrine has generally been abolished.

Question 24

The ultra vires doctrine has generally been abolished except?

Answer 24

Except that a shareholder derivative suit may be brought against the corporation to enjoin performance of a specific ultra vires executory contract and the corporation may bring suit against officers or directors to recover damages for past ultra vires acts that damaged the corporation.

Question 25

Florida corporations generally can do what based of the road statutory powers conferred?

Answer 25

Anything tha tis rationally related to a business purpose except done to candidates for federal office.

Question 26

How may an act be found to be an ultra vires act and if so will the ultra virus doctrine apply?

Answer 26

Generally only where the corporation’s articles restrict its powers. The ultra vires doctrine provides for a very limited defense so a corporation will not avoid a contract merely because the contract is outside the corporation’s powers.

Question 27

What may constitute incorporators for the formation of a Florida corporation?

Answer 27

Natural persons, corporations, partnerships, or association.

Question 28

What is the articles of incorporation?

Answer 28

The agreement among the incorporators regarding details of the corporation’s organization.

Question 29

What must the articles of incorporation of a Florida corporation state?

Answer 29

The corporation’s name indicating its corporate status, the number of shares and distinguishing characteristics of each class or series, the preemptive rights (none if not stated), the address of the initial registered office, the name of initial registered agent together with the agent written acceptance, the names and addresses of the incorporators, the address of principal office if known and mailing address of the corporation.

Question 30

What may the articles of incorporation of a Florida corporation state?

Answer 30

The corporation;s number of directors constitution the initial board and their names and addresses, the par value of stock or a statement that stock shall have no part value, the imposition of personal liability on shareholders to a specific extent and on specific conditions,the initial purposes when may include any lawful business, and an;y other provision not inconsistent with law regarding managing the business or defining powers of the corporation directors and shareholders.

Question 31

Under what conditions are the articles of incorporation of a Florida corporation filed?

Answer 31

Upon the incorporators delivering the articles of incorporation to the department of state and all legal requirements being met.

Question 32

Upon the filing of the articles of incorporation of a Florida corporation, what?

Answer 32

Upon the filing of the articles of incorporation of a Florida corporation, the corporate existence begins.

Question 33

Under Florida law, the filing of the articles of incorporation is deemed as what?

Answer 33

As conclusive evidence of valid incorporation.

Question 34

Under Florida law the filing of the articles of incorporation is deemed conclusive evidence of valid incorporation except what?

Answer 34

Except as against the state.

Question 35

Due to Florida law deeming the filing of the article of incorporation as conclusive evidence of valid incorporation except as against the state, the common law concepts of de jure corporation, de facto corporation, and corporation by estoppel what?

Answer 35

In Florida, the common law concepts of de jure corporation, de facto corporation, and corporation by estoppel have limited application.

Question 36

What is de jure corporation?

Answer 36

Common law this corporation was formed upon substantial compliance with all mandatory requirements for incorporation; and its corporate status could not be challenged by anyone, even the state.

Question 37

What is de facto corporation? When is this doctrine not available?

Answer 37

A corporation may exist even with a substantial defect in formation if there has been a good faith effort to incorporate, colorable compliance with the law, and actuals of corporate status. This doctrine is not available when defendant had actual knowledge of the lack of incorporation.

Question 38

What is corporation be estoppel?

Answer 38

An equitable doctrine that may be applied when persons have dealt with a defectively formed corporation as if it were a legal corporation; the persons may be estopped from avoiding contracts or attempting to hold shareholders personal liable on grounds of defective corporation status.

Question 39

When is the doctrine of corporation by estoppel not normally applicable?

Answer 39

In tort actions where there has been no course of dealing.

Question 40

Due to Florida statute, a person can be held personally liable for a deceptively formed corporation only if what?

Answer 40

The person purports to act on behalf of the corporation with knowledge that there was no valid incorporation.

Question 41

In Florida, when is a person who purports to act on behalf of the corporation with knowledge that there was no laid incorporation not personally liable?

Answer 41

When a third party also had knowledge that there was no valid incorporation, to that third party.

Question 42

What does pierce the corporate veil mean?

Answer 42

Disregard the corporate entity.

Question 43

May a court pierce the corporate veil?

Answer 43

In certain situations, a court may disregard the corporate entity.

Question 44

If a court does pierce the corporate veil, who is liable for what?

Answer 44

Shareholders who are active in the business may beheld jointly and severally able as if they were parters; inactive shareholders are generally not held liable.

Question 45

What is the alter ego doctrine? What does Florida law require for the alter ego doctrine to apply?

Answer 45

Doctrine that allows the court to disregard the corporate entity (pierce the corporate veil) when the corporation appears to be the alter ego of the shareholders and used by them as a conduit for their personal affairs. Florida law requires a showing of improper conduct.

Question 46

What does thin capitalization mean?

Answer 46

A corporation must have capital adequate to meet the corporation’s reasonably foreseeable needs.

Question 47

What is the deep rock doctrine?

Answer 47

In bankruptcy proceedings, capital contributions denominated loans by shareholders of close corporations may be subordinated to debts owed to outsiders.

Question 48

What is a subsidiary corporation?

Answer 48

A subset of a parent corporation.

Question 49

When may a parent corporation be liable for the debts of a subsidiary ?

Answer 49

When the subsidiary is inadequately capitalized, intermingled with the parent, or otherwise not a true distinct entity.

Question 50

What does capital structure refer to in corporation?

Answer 50

Capital structure refers to long-term investment in the corporation (stock and bonds and preferred stocks and bonds and common stocks).

Question 51

What is authorized capital?

Answer 51

Authorized capital is the number and kinds of shares provided for in the articles of incorporation, whether or not actually issued.

Question 52

How many classes of common stock, voting or non-voting, must be included in the articles of corporation?

Answer 52

There must be at least one class of common stock, voting or nonvoting, representing the residual ownership of the corporation.

Question 53

How many kinds of preferred stock, voting or non-voting, may be included in the articles of incorporation and what does preferred generally indicate?

Answer 53

Preferred stock, voting or non-voting, may be of several different kinds, generally with a right to be paid a fixed dividend ahead of any dividend payments to holders of common stock.

Question 54

What is a subscription agreement? When was a subscription agreement revocable under common law versus current Florida statute?

Answer 54

A subscription agreement is a contract under which the subscriber agrees to purchase a certain number of shares at a specified price. Under common law, subscription agreements were generally revocable until adopted by the corporation; the Florida statute makes reincorporation subscription agreements irrevocable for six months unless otherwise provided.

Question 55

What is consideration for shares in Florida? Who determines the amount and adequacy of consideration?

Answer 55

Cash property past services or promises to perform services evidenced by a written contract. The board determines the amount and adequacy of consideration. The board’s judgment is conclusive in Florida.

Question 56

What happens if a holder of or subscriber to shares pays less than the full consideration he agreed to pay?

Answer 56

He may be held liable by the corporation and its successors and assigns trustees in bankruptcy and shareholders suing derivatively.

Question 57

What is the doctrine of equitable contribution?

Answer 57

The doctrine setting all subscribers purchasing stock last the same time should pay the same price and the price for new stock issues should be adequate so as not to dilute unfairly the value of existing shareholders stock.

Question 58

Stocks and bonds issue by a corporation must satisfy the requirements of what?

Answer 58

The federal Securities Act of 1933.

Question 59

What must be filed with the SEC disclosing all material facts for nonexempt securities?

Answer 59

A registration statement disclosing all material facts must be filed with the SEC for nonexempt securities.

Question 60

What state laws regulate the sale of securities and what do those laws do?

Answer 60

Sales of securities are also regulated through state blue sky laws. State blue sky laws impose standards governing the quality of securities sold in addition to the disclosure and antifraud provisions.

Question 61

What are preemptive rights?

Answer 61

Rights that entitle a shareholder to purchase a number of shares of new stock or treasury shares that are being issued sufficient to maintain her relative voting strength.

Question 62

In Florida, unless granted in the articles of incorporation, what preemptive rights do shareholders have?

Answer 62

In Florida, shareholders have no preemptive rights to acquire unissued shares or treasury shares unless granted by the articles.

Question 63

A corporation may acquire its own shares subject to what?

Answer 63

Subject to the same limitations set forth for other distributions.

Question 64

In repurchase by installment, when is the effect of the distribution for purposes of the two solvency tests measured?

Answer 64

In repurchase by installment, the effect o the distribution for purposes of the two solvency tests is measured as the earlier of the date money or other property is transferred or debt incurred by the corporation, or the date the shareholder ceases to be a shareholder with respect to the acquire shares.

Question 65

If the articles of incorporation prohibit the re-issuance of acquired shares, what happens to the number of authorized shares upon amendment of the articles.

Answer 65

The number of authorized shares is reduced by the number of shares acquired, upon amendment of the articles of incorporation.

Question 66

Has Florida adopted the 1994 revision of UCC Article 8 Investment Securities?

Answer 66

Florida has adopted the 1994 revision of UCC Article 8 Investment Securities.

Question 67

In Florida, an investment security may be either _____ or ______.

Answer 67

In Florida, an investment security may be either certificated or uncertificated.

Question 68

What does certificated mean?

Answer 68

The security is represented by an instrument issued in bearer or registered form.

Question 69

What does uncertificated mean?

Answer 69

The security is not represented by an instrument; it is registered on the books maintained by the issuer.

Question 70

Under the provisions of Article 8, is a contract or modification of a contract of the purchase or sale of an investment security within the statute of frauds?

Answer 70

A contract or modification of a contract for the purchase or sale of an investment security is not within the Statute of Frauds.

Question 71

Under the provisions of Article 8, when does an issuer have a defense against a purchaser for value?

Answer 71

In general, an issuer has very limited defenses against a purchaser for value, except where the certify ate is not genuine.

Question 72

Under the provisions of Article 8, the seller of a security warrant what three things to the purchaser for value?

Answer 72

The seller of a security warrants to the purchaser for value that the transfer is effective and rightful, that the security is genuine and unaltered, and that she knows of no fact impairing its validity.

Question 73

Under the provisions of Article 8, the true owner of a wrongfully transferred security may reclaim it from who, except what

Under the provisions of Article 8, the true owner of a wrongfully transferred security may go against who, unless what?

Answer 73

The true owner of a wrongfully transferred security may reclaim it from anyone except a protected purchaser.

The true owner may also go against a protected purchaser if the security was transferred because of an unauthorized inducement, unless the protected purchaser has in good faith received a new certificate or had the transfer registered in her name.

Question 74

Under the provisions of Article 8, the true owner of a lost destroyed or wrongfully taken certificated security is entitled to a replacement if what three requirements are met?

Answer 74

The true owner of a lost destroyed or wrongfully taken certificated security is entitled to a replacement if she demands it before the issuer has notice that a protected purchaser holds the original, files an indemnity bond, and satisfies the issuer’s other reasonable requirements.

Question 75

Under the provisions of Article 8, if a protected purchaser later turns up with the original certificated security, the issuer must what?

Answer 75

The issuer must register it, even if the issuer has also registered a replacement to the true owner.

Question 76

Under the provisions of Article 8, once an issuer registers an original certificated security after having registered a replacement to the true owner, the issuer may what?

Answer 76

The issuer may reclaim the replacement or may sue on the indemnity bond.

Question 77

What is an example of a restriction on the transfer of stock?

Answer 77

A right of first refusal upon sale.

Question 78

When are restrictions on the transfer of stock common?

Answer 78

In close corporations.

Question 79

When will restrictions be enforced?

Answer 79

When they are reasonable.

Question 80

By Florida statute, certificates must what or what?

Answer 80

Certificates must summarize on their face any restrictions pertaining to their transfer or state that the corporation will furnish a full statement thereof.

Question 81

A third party who purchases stock without notice of restrictions can do what?

Answer 81

Can compel a corporation to transfer stock to him on its books even though the transfer violates an existing agreement.

Question 82

If a third party purchases stock with notice of the restriction on transfer, she has what?

Answer 82

She has no rights against the corporation for failure to transfer, but may recover from the seller.

Question 83

Do the majority of courts today require insiders to disclose inside information to persons from whom they buy shares?

Answer 83

The majority of courts today do not requires insiders to disclose inside information to persons from whom they buy shares.

Question 84

What is the special facts doctrine?

Answer 84

The special facts doctrine is an exception to the general rule that the majority of courts today do not require insiders to disclose inside information to persons from whom they buy shares.

Question 85

What does the special facts doctrine state?

Answer 85

Insiders dealing face to face with shareholder/sellers must disclose inside facts of an unusual nature.

Question 86

Do Florida courts hold directors and tippees liable to the corporation for personal profits realized in trading on the basis of inside information?

Answer 86

Florida courts do not hold directors and tippees liable to the corporation of personal profits realized in trading on the basis of inside information.

Question 87

What are the four categories of important federal securities law in relation to Florida corporations?

Answer 87

Section 16(b) of the securities exchange act of 1934, SEC Rule 10b-5, federal insider trading sanctions, and regulations of tender offers.

Question 88

What does Section 16(b) of the Securities Exchange Act of 1934 require?

Answer 88

That officers, directors, and 10% shareholders return to their corporation all profits from any purchase and sale or sale and repurchase of shares within a six month period.

Question 89

Does Section 16(b) of the Securities Exchange Act of 1934 require a showing of bad faith or use of inside information?

Answer 89

Section 16(b) of the Securities Exchange Act of 1934 requires no showing of bad faith or use of inside information.

Question 90

What does Section 16(b) of the Securities Exchange Act of 1934 apply to?

Answer 90

Section 16(b) of the Securities Exchange Act of 1934 applies to publicly held corporations whose shares are traded on a national exchange, or that have at lease 2,000 shares, or 500 shareholders who are not accredited investors in any outstanding class and more than $10 million in assets.

Question 91

Under Section 16(b) of the Securities Exchange Act of 1934, accredited investors include who?

Answer 91

Accredited investors include high income or net worth individuals and officers or directors of the issuer.

Question 92

SEC Rule 10b-5 broadly prohibits what, subject only to what?

Answer 92

Fraud and deceit including omissions of any material fact in connection which purchase or sale of any security, subject only to a minimal menus with interstate commerce and showing of scienter.

Question 93

Rule 10b-5 is concerned only with what and not what? Is its application limited to insiders?

Answer 93

Rule 10b-5 is concerned only with adequate disclosure and not with substantive fairness. Its application is not limited to insiders.

Question 94

Enforcement of Rule 10b-5 is by what or what?

Answer 94

Enforcement is by SEC injunction or action requiring violators to disgorge their profits or by private civil action for damages.

Question 95

Federal insider trading sanctions allow for what?

Answer 95

To SEC to sue persons including tippees illegally trading on the basis of inside information for an amount equal to three times their profit or loss avoided.

Question 96

Under federal insider trading sanctions, private persons who trade contemporaneously with a securities law violator may sue for what?

Answer 96

Private persons who trade contemporaneously with a securities law violator may sue for damages.

Question 97

What is a tender offer and what is usually the sell price of a tender offer?

Answer 97

A tender offer is a public invitation to shareholders to sell their shares in the targeted corporation, usually at a premium over the market price.

Question 98

A tender offer is often conditioned on what?

Answer 98

Acceptance by the folders of a specified number of shares.

Question 99

What is the Williams Act in relation to tender offers?

Answer 99

Act that imposes antifraud and disclosure requirements on all tender offers involving more than 5% of a target’s stock.

Question 100

What are control share acquisition statutes in relation to tender offers and how do they operate?

Answer 100

Statutes to protect corporations from outside takeovers that usually operate by disenfranchising the control shares acquired by a tender offer until the remaining shareholders approve restoration of voting rights and provide other protections.

Question 101

What do Florida blue sky laws contain and what are they similar to?

Answer 101

Broad antifraud provisions, similar to those of SEC Rule 10b-5.

Question 102

Do the Florida blue sky laws require scienter?

Answer 102

Florida blue sky laws do not require science.

Question 103

When may the Florida blue sky laws be the only basis for civil relief?

Answer 103

When the transaction has no nexus with interstate commerce.

Question 104

What is a promoter?

Answer 104

Person who undertakes to form a corporation and to procure the necessary capital and other items.

Question 105

Who is not considered a promoter? What is an incorporator?

Answer 105

Persons such as attorneys acting in a professional advisory capacity. An incorporator is one who signs the articles of incorporation and may or may not be a promoter.

Question 106

What fiduciary duty do promoters have?

Answer 106

Promoters must act in good faith and in the best interest of all investors.

Question 107

A promoter who profits from a sale to the corporation may be liable to it for _____ or forced to _____, unless what?

Answer 107

A promoter who profits from a sale to the corporation may be liable to it for the profits or forced to rescind the sale unless there was a full disclosure to and approval by the directors or shareholders.

Question 108

Do promoters remain liable on contract they enter on behalf of the corporation, even after the corporation adopts the contract?

Answer 108

Except as a particular contract otherwise provides, promoters remain liable on contracts they enter on behalf of the corporation, even after the corporation adopts the contract, unless the parties agree to a novation.

Question 109

Promoters remain liable on contract they enter on behalf of the corporation even after the corporation adopts the contract, unless what?

Answer 109

Unless, the parties agree to a novation.

Question 110

Are persons purporting to act on behalf of a corporation having actual knowledge that there was no incorporation liable for all liabilities created while so acting?

Answer 110

Persons purporting to act on behalf of a corporation having actual knowledge that there was no incorporation are jointly and severally liable for all liabilities created while so acting.

Question 111

Persons purporting to act on behalf of a corporation having actual knowledge that there was no incorporation are jointly and severally liable for all liabilities created while so acting, except for what?

Answer 111

Except for those created to persons also having knowledge that no incorporation took place.

Question 112

Generally a promoter will be personally liable on a pre-incorporation contract unless what?

Answer 112

Unless the contract clearly negates personal liability, in which case it will be treated as a continuing offer to the corporation.

Question 113

Even after the corporation is formed and adopts the reincorporation contract, the promoter remains personally liable unless what?

Answer 113

Unless there is a novation.

Question 114

What is a novation?

Answer 114

A novation is a specific agreement by all parties that the promoter shall be released and the corporation substituted for the promoter.

Question 115

In general, does a promoter have right of action to recover expenses or salary form the corporation?

Answer 115

In general, a promoter has no right of to recover expenses or salary from the corporation.

Question 116

In general a promoter has no right to recover expense or salary from the corporation, but some courts what?

Answer 116

But some courts have allowed recovery of the reasonable value of services rendered.

Question 117

If the corporation is never formed, promoters must what?

Answer 117

Promoters must return all subscribers’ money even if there has been no wrongdoing.

Question 118

Do shareholders normally have the power to control the day-to-day management of a corporation?

Answer 118

Shareholders normally do not have power to control the day-to-day management of a corporation, but may be given management powers by the articles.

Question 119

Shareholders normally do not have power to control the day-to-day management of a corporation, but shareholders may be given management powers by what?

Answer 119

By the articles of incorporation.

Question 120

What are the three ways that shareholders exercise indirect management of a corporation?

Answer 120

Shareholders exercise indirect management by electing directors, amending articles or bylaws, or approving fundamental corporate changes.

Question 121

Power to run the day-to-day affairs of a corporation is vested in what?

Answer 121

In the board of directors.

Question 122

Who has the power to elect the board of directors?

Answer 122

The shareholders.

Question 123

If there are relatively few shareholders and the corporation’s shares are not publicly traded the shareholders may are to what?

Answer 123

Dispense with the board of directors by describing a person or persons who will have the power of the board.

Question 124

What constitutes relatively few shareholders of a Florida corporation?

Answer 124

100 or fewer.

Question 125

Annual meetings must be held for what?

Answer 125

For the election of directors and other business.

Question 126

Special meeting may be held for what?

Answer 126

Called for any appropriate purpose.

Question 127

Shareholders must be notified of meetings, including the purpose of special meetings when?

Answer 127

At least 10 days in advance.

Question 128

What must normal be approve by the shareholders?

Answer 128

Al fundamental changes.

Question 129

How is eligibility to vote determined?

Answer 129

Eligibility in determined by stock ownership as of the record date.

Question 130

When may the eligibility to vote be determined?

Answer 130

The record date may be determined not more than 70 days before the meeting.

Question 131

What is a quorum?

Answer 131

A majority of shares entitled to vote, unless otherwise provided.

Question 132

May voting be by proxy?

Answer 132

Corporate voting in Florida may be by proxy.

Question 133

May the article of incorporation provide for cumulative voting for directors?

Answer 133

The articles of incorporation may provide for cumulative voting for directors.

Question 134

What is cumulative voting for directors?

Answer 134

Cumulative voting is a voting method that gives each shareholder number of votes dual to the number of voting shares he holds times the number of directors to be elected.

Question 135

Who does cumulative voting aid in achieving representation on the board of directors?

Answer 135

Cumulative voting aids minority shareholders in achieving representation on the board of directors.

Question 136

In general, may a shareholder compel directors to declare dividends?

Answer 136

In general, shareholders cannot compel directors to declare dividends.

Question 137

Absent what, directors are given what discretion in the declaration of dividends.

Answer 137

Absent bad faith, directors are given wide discretion in the declaration of dividends.

Question 138

Once declared, may a dividend be revoked?

Answer 138

Once declared, a dividend may not be revoked.

Question 139

Once declared, a dividend may not be revoked, unless what?

Answer 139

Unless the dividend payment would be illegal.

Question 140

What does declaration of a dividend create?

Answer 140

Declaration of a dividend creates an enforceable debt owed to the shareholders.

Question 141

In order to be legal, how many tests must be met for distribution other than a distribution of the corporation’s own shares?

Answer 141

Two tests must be met for distribution other than a distribution of the corporation’s own shares to be legal.

Question 142

What are the two tests that must be met for distribution other than a distribution of the corporation’s own shares to be legal?

Answer 142

Equity test and balance sheet or bankruptcy test.

Question 143

What is the equity test?

Answer 143

A distribution of dividends is permissible only if after giving it effect the corporation will be able to pay its debts as they become due in the usual course of business.

Question 144

What is the balance sheet or bankruptcy test?

Answer 144

Distributions are limited dot the amount by which total assets exceed the sum of total liabilities and the liquidation preference of preferred shares.

Question 145

Directors who ______ or ______ vote to declare dividends are liable to the corporation for what amount?

Answer 145

Willfully or negligently vote to declare dividends are liable to the corporation for the amount paid improperly.

Question 146

Does Florida’s director immunity statute insulate directors from liability for willfully or negligently voting to declare dividends up to the amount paid improperly?

Answer 146

Florida’s director immunity statute does not insulate directors from liability for willfully or negligently voting to declare dividend sup to the amount paid improperly.

Question 147

What amount are shareholders liable to corporate creditors or the corporation’s trustee in bankruptcy?

Answer 147

Shareholders are liable to corporate creditors or the corporation’s trustee in bankruptcy for the amount of dividends received, whether or not they knew the corporation was insolvent.

Question 148

Is the amount shareholders are liable to corporate creditors or the corporation’s trustee in bankruptcy affected by whether or not why knew the corporation was insolvent?

Answer 148

No, shareholders are liable to corporate creditors or the corporation’s trustee in bankruptcy for the amount of dividends received, whether or not they knew the corporation was insolvent.

Question 149

Every shareholder has an absolute right to inspect, during regular business hours at the corporation’s principal office, what?

Answer 149

The articles of incorporation, bylaws, minutes of shareholders’ meetings, resolutions of the board creating on e or more series or classes of shares, lists of the names and business addresses of the current directors and officers, and the most recent annual report.

Question 150

A shareholder of a Florida corporation or a foreign corporation authorized to transact business in Florida, who resides in Florida, is entitled to inspect the bylaws an for a list of the names and business addresses of the current director and officers on how much notice an where?

Answer 150

On five days’ written notice at a reasonable location in Florida specified by the corporation.

Question 151

If what three requirements are met, the shareholders may inspect the minutes of any meeting of the board, the accounting records of the corporation. the record of shareholders, and any other books and records?

Answer 151

If the demand is made in good faith and for a proper purpose, if the shareholder describes with reasonable particularity his purpose an doth records he desires to inspect, and if the record are directly connected to his purpose.

Question 152

When must written demand be made before the day on which a shareholder wishes to inspect the minutes of any board meeting, accounting records, record of shareholders, any any other book?

Answer 152

Written demand must be made at least five business days before the day on which the shareholder wishes to inspect.

Question 153

May shareholders establish a voting trust to irrevocably confer upon a trustee the right to vote their shares?

Answer 153

.

Question 154

Does the trust agreement have to be deposited with the corporation and is it subject to inspection by any shareholder?

Answer 154

.

Question 155

Are trust certificates representing shares freely transferable?

Answer 155

Trust certificates representing shares are freely transferable.

Question 156

Trust certificates representing shares are freely transferable but what?

Answer 156

But the transferee is bound by the agreement.

Question 157

What is a pooling agreement?

Answer 157

Agreement where shareholders agree to vote their shares a certain way.

Question 158

Must a pooling agreement be in writing and signed.

Answer 158

A pooling agreement must be in writing and signed.

Question 159

When are transfers of the shares bound by the pooling agreement?

Answer 159

When the existence of the agreement is not;ed on the share certificate or they otherwise have notice of it.

Question 160

What may be available to enforce a pooling agreement

Answer 160

Specific performance.

Question 161

Will the Florida statute applicable to close corporations hold them invalid as between the parties on the ground that they violate the corporate nom?

Answer 161

The Florida statue applicable to close corporations authorizes a rang of shareholder agreements, and will l not hold them invalid as between the parties on the grounds that they violate the corporate norm.

Question 162

The Florida statute applies to close corporations only when what?

Answer 162

Only when all shareholders consent.

Question 163

In general, do shareholders have a fiduciary duty to the corporation?

Answer 163

In general, shareholders have no fiduciary duty to the corporation.

Question 164

May shareholders act in their personal interests?

Answer 164

Shareholders may act in their own personal interest.

Question 165

Controlling shareholders may no use their power to what or what?

Answer 165

Defraud or oppress the minority.

Question 166

What is a derivative suit?

Answer 166

A derivative suit is on brought by a shareholder to enforce a corporate cause of action.

Question 167

In a derivate suit, the shareholder must first what?

Answer 167

The shareholder must first make demand on the directors that they prosecute the suit.

Question 168

In a derivative suit, the shareholder must wait how many days before bringing suit after first making demand on the directors that they prosecute the suit.

Answer 168

90 days.

Question 169

The shareholder must wait 90 days before binding suit in a derivative action unless what?

Answer 169

Unless the shareholder is notified sooner that her demand has been rejected or the delay will cause irreparable injury.

Question 170

In order to be eligible to bring suit, the shareholder must what or what?

Answer 170

The shareholder must have owned stock in the corporation at the time the alleged wrong took place or the shares must have devolved upon her by the operation of law.

Question 171

Some courts will dismiss a derivative suit if the corporation what?

Answer 171

If the corporation, through the disinterested directors or an independent special litigation committee, determines as a matter of business judgment that ht suit is not in the corporation’s interest.

Question 172

A court may ordre a corporation to what or what?

Answer 172

To reimburse a successful shareholder/plaintiff, or may order an unsuccessful plaintiff to reimburse defendants for their expenses.

Question 173

May a corporation have one or more directors?

Answer 173

A corporation may have one or more directors, as fixe by the articles or bylaws.

Question 174

Directors must be how old?

Answer 174

18 or older.

Question 175

How re directors elected?

Answer 175

Directors are elected by plurality vote.

Question 176

May the board of directors by elected by cumulative voting and staggering of terms.

Answer 176

It is optional that a board of directors be elected by cumulative voting and staggering of terms.

Question 177

May directors be removed with or without cause by shareholders.

Answer 177

Directors may be removed by shareholders with or without cause, unless otherwise provided.

Question 178

What corporation may dispense with or limit the authority of a board of directors?

Answer 178

A corporation having 100 or fewer shareholders may dispense with or limit the authority of a board of directors.

Question 179

Are directors required to meet and act as a board?

Answer 179

Directors are required to meet and act as a board.

Question 180

May the board of directors meetings be by phone conference?

Answer 180

Board of directors meetings may be by phone conference.

Question 181

Is notice of regular meetings of the board of directors required? Notice of special meetings?

Answer 181

Notice of regular meeting is not required but notice of special meetings must be given last least two days in advance.

Question 182

If a director doe not receive required notice and does not attend the board of directors meeting, then what?

Answer 182

Then any action taken ate the meting is unauthorized.

Question 183

What is a quorum in relation to a board of directors meeting?

Answer 183

A quorum consists of a majority of the authorized number of directors, with vacant directorships counted as absent.

Question 184

May the articles of incorporation authorize a quorum to consist of less than a majority but no fewer than one third of the authorized number of directors?

Answer 184

The articles of incorporation may authorize a quorum to consist of less than a majority but no fewer than one third of the authorized number of directors.

Question 185

What amount of directors present at a board of directors meeting must assent to approve an action?

Answer 185

To approve an action the majority of directors present at a board of directors meeting must assent.

Question 186

To approve an action the majority of directors present at a board of directors meeting must assent, unless what?

Answer 186

To approve an action the majority of directors present at a board of directors meeting must assent, unless the articles or bylaws require a greater number.

Question 187

May actions be approve by the board of directors without a meeting if the directors consent unanimously in writing?

Answer 187

Actions may be approved by the board of directors without a meeting if the directors consent unanimously in writing.

Question 188

If a director has entered into an extraordinary contract with another entity on the corporation’s behalf, either on his own accord or with the approval of some of the directors or with the approval of all the directors who were called individually, then what?

Answer 188

The director does not have the power to bind the corporation on extraordinary contacts unless there is actual authority to act. Actual authority generally can arise only if proper notice was given for a directors’ meeting, a quorum was present, and a majority of the directors approved the action.

Question 189

Directors have powers necessary to what?

Answer 189

Necessary to manage the business of the corporation.

Question 190

Powers necessary to manage the business of the corporation include what?

Answer 190

The power to eke t and remove officers, to declare dividends, and to initiate fundamental changes for submission to shareholders for approval.

Question 191

What do directors have a right to do?

Answer 191

Directors have a right to inspect corporate records, to reasonable rely on information provided by management and experts, to be reimburse for expenses, and general;y to be indemnified in defending their actions taken in good faith.

Question 192

How is directors’ compensation determined?

Answer 192

Directors’ compensation is only as the bylaws provide.

Question 193

Directors are fiduciaries of the corporation and its shareholders and thus owe what?

Answer 193

Owe fiduciary duties of care and loyalty.

Question 194

In relation to the board of directors, the duty of care means what?

Answer 194

A director must generally exercise the crew and skill of an ordinarily prudent person in like circumstances.

Question 195

Is the standard for the fiduciary duty of care subjective?

Answer 195

.

Question 196

Is the standard for the fiduciary duty of care given exceptions for figurehead directors or for an individual’s actual level of skill?

Answer 196

.

Question 197

When does the business judgment rule apply to Florida corporations?

Answer 197

The business judgment rule applies to Florida corporations when a court is called upon to consider the wisdom of directors’ decisions.

Question 198

When a court is called upon to to consider the wisdom of directors’ decisions, will rational, informed, good-faith decisions over which reasonable persons could have differed be second guessed?

Answer 198

When applying the business judgment rule, Florida courts will not second-guess ration, informed, good-faith decisions over which reasonable persons could have differed.

Question 199

At common law, could directors be held personally liable to the corporation for breaches of the duty of care?

Answer 199

At common law, corrects could be held personally liable to the corporation for breaches of the duty of care.

Question 200

Under Florida statute, can directors be held personally liable to the corporation for breaches of the duty of care?

Answer 200

Under Florida statute, directors cannot be held personally liable to the corporation for breaches of the duty of care.

Question 201

When does the fiduciary duty of loyalty apply in relation to the board of directors?

Answer 201

The fiduciary duty of loyalty applies in relation to the board of directors whenever director has a personal stake in an action to be taken by the board.

Question 202

Is a contract in which a director is financially interested voidable by the corporation?

Answer 202

A contract in which a director is financially interest is not voidable by the corporation.

Question 203

Is a contract in which a director is financially interested voidable by the corporation if the interested director is counted for quorum purposes and votes?

Answer 203

Even if the interested director is counted for quorum purposes and votes, the contract is not voidable if she has made full disclosure of her interest and the contract is approved either by a disinterested majority of the board or by the shareholders or if the contract is fair and reasonable at the time it is approved.

Question 204

Who has the burden of showing fairness in relation to the fiduciary duty of loyalty?

Answer 204

The director who is financially interested in the outcome of an action has the burden of showing fairness.

Question 205

If the interested director fails to disclose to the board her interest in an action, the transaction can be what?

Answer 205

Set aside unless it is fair to the corporation.

Question 206

What is the corporate opportunity doctrine?

Answer 206

The doctrine hat requires directors and officers to inform the corporation of business opportunities of which it might wish to take advantage.

Question 207

If a director fail the corporate opportunity doctrine and personally takes advantage of the opportunity, she may be compelled to what?

Answer 207

She may be compelled to to transfer the benefits to the corporation.

Question 208

In Florida, has director liability to the corporation for breaches of the duty of loyalty been statutorily limited?

Answer 208

In Florida, director liability to the corporation of breaches of the duty of loyalty have been statutorily limited but not abolished.

Question 209

When must a director preset a business opportunity to her corporation and then possibly take advantage of it personally only if the corporation decides not to pursue it?

Answer 209

Whenever a director learns of a business opportunity and her corporation would have an actual or expectant interest in the opportunity, she must present the opportunity to her corporation and pursue it personally only if the corporation decides not to pursue it.

Question 210

If a corporation is not given the chance to take advantage of a business opportunity, the director who benefits personally from the opportunity may what?

Answer 210

The director who benefits personally from the opportunity may be forced to turn over the opportunity and or any profits derived form the opportunity to the corporation.

Question 211

If the general standards of directors were violated, the director who assents to any improper distribution is liable to the corporation for what amount?

Answer 211

For the amount of the distribution in excess of the amount legally available, if the general standards for directors were violated.

Question 212

What defense is available to the director for a violation of the standards of directors?

Answer 212

The director reasonably relied in good faith on financial statements prepared by management or the corporation’s public accountants.

Question 213

May directors base a determination that a distribution is not prohibited on the basis of a fair valuation of the corporation’s assets?

Answer 213

Directors may base a determination that a distribution is not prohibited on the basis of a fair valuation of the corporation’s assets.

Question 214

May directors incur liability under the federal securities laws?

Answer 214

Directors may also incur liability under the federal securities laws.

Question 215

Section 11 of the 19f33 Securities Act provides for what?

Answer 215

A director to be held liable for signing a registration statement that contains materially false or misleading information.

Question 216

Directors on a corporation’s audit committee may incur liabilities under the Sarbanes-Oxley Act (SOX) for what three things?

Answer 216

For failure to supervise the company’s audit firm, making loans on special terms to director or officers, and making personal stock trades of the company’s stock during pension blackout periods.

Question 217

How are officers and agents of a corporation elected or appointed?

Answer 217

Officers and agents of a corporation are elected or appointed by the board of directors.

Question 218

Officers and agents of a corporation carry out their duties under the general supervision of who and in accord with what?

Answer 218

Officers and agent of a corporation cadre out their duties under the general supervision of the board of directors and in accord with corporate policy.

Question 219

Must a corporation have the officers described in its bylaws or appointed by its board of directors?

Answer 219

A corporation must have the officers described in its bylaws or appointed by its board of directors.

Question 220

Although a corporation must have th officers described in its laws or appointed by its board of directors, what?

Answer 220

One person may hold two or more offices.

Question 221

What law applies to give the office or agent the power to bind the corporation in dealings with third parties.

Answer 221

.

Question 222

What is actual authority?

Answer 222

.

Question 223

What is apparent authority?

Answer 223

.

Question 224

Who has implied authority to do acts in the ordinary course of business of a corporation?

Answer 224

.

Question 225

Although the president or CEO has the implied authority to do acts in the ordinary course of business of a corporation, she does not have what?

Answer 225

She does not have implied authority to do extraordinary acts.

Question 226

Officers’ fiduciary duties rights and liabilities are similar to those of who?

Answer 226

Those of directors.

Question 227

Under SOX, a corporation’s CEO, CFO, or similar officer can be held liable for what?

Answer 227

For falsely certifying a report under the 1934 Securities Exchange Act.

Question 228

Amendments to the articles of incorporation are normally first approved by who and then submitted to the shareholders for their approval?

Answer 228

Amendments to the articles of incorporation are normally first approved by the board of directors and then submitted to the shareholders for their approval.

Question 229

Unless the article of incorporation statute or board requires a greater proportion, the amendment to the articles of incorporation must be approved by what?

Answer 229

A majority of the boys entitled to be cast on th amendment by any on group with respect to which the amendment would create dissenters’ rights and the majority vote of every other voting group entitle dot vote on the amendment.

Question 230

If a proposed amendment to the articles of incorporate would adversely affect a particular class of shareholders, then that class is what?

Answer 230

Entitled to to vote (even if it is a nonvoting class) separately on the amendment, and a majority of that class is required.

Question 231

What is the distinction between shareholder voting on regular issues and shareholder voting gone fundamental changes?

Answer 231

Regular issues can be approved by a majority of the votes cast a a board of directors meeting so long as there is a quorum; a fundamental corporate change must be approved by a majority of a the outstanding shares entitled to vote, not just those repressed at a meeting.

Question 232

The board of directors may adopt amendments to the articles of incorporation unless what?

Answer 232

Unless the articles of incorporation provide otherwise.

Question 233

What are examples of amendments to the articles of incorporation that the board of directors may adopt unless the articles of incorporation provide otherwise?

Answer 233

Extending the duration of the corporation, deleting the names of initial directors, and making certain changes to the corporate name without shareholder action.

Question 234

In a merger, on e of the combining corporations remain in being and the other does what?

Answer 234

The other absorbs the first corporation.

Question 235

In a share exchange, one corporation acquires all of the what?

Answer 235

All of the outstanding shares of one or more classes or series of another corporation.

Question 236

In Florida, practically any legally recognized business entity can do what?

Answer 236

Can merge into another business entity.

Question 237

During a merger, generally the directors of both corporations develop a plan of what?

Answer 237

Both corporation develop a plan of merger or share exchange.

Question 238

A plan of merger or share exchange must be approved by what?

Answer 238

A majority or greater proportion as the articles may require of the shareholders of each corporation.

Question 239

An approved plan becomes effective when what?

Answer 239

When the articles of merger or share exchange are filled with the department of state.

Question 240

What is a short form merger?

Answer 240

A short form merger is the merging of a parent and a subsidiary at least 80% owned by the parent and does not require shareholder approval.

Question 241

Does a short form merger require the approval of shareholders?

Answer 241

A short form merger does not require shareholder approval.

Question 242

Is the sale of all or substantially all of a corporation’s assets deemed a fundamental change?

Answer 242

The sale of all or substantially all f a corporation’s assets is deemed to be a fundamental change.

Question 243

The sale of all or substantially all of a corporation’s assets must be approved by who?

Answer 243

Approved by the shareholders of the acquired corporation.

Question 244

Where a sale of assets is mad in exchange for stock of the acquiring corporation which assumes the liabilities of hate acquired corporation and the latter dissolves, distributing the stock received to its shareholders has the net effect of what?

Answer 244

The net effect of something almost identical to a merger.

Question 245

When a sale of assets is mad in exchange of stock of the acquiring corporation which assumes the liabilities of the acquired corporation and the latter dissolves, some courts treat the sale as a what?

Answer 245

De facto merger.

Question 246

What does a de facto merger entitle the shareholder of the acquiring corporation to?

Answer 246

To a vote and other rights.

Question 247

Does Florida have case law accepting or rejecting the de facto merger doctrine?

Answer 247

Florida has no case law either accepting or rejecting the de facto merger doctrine.

Question 248

Generally a corporation purchasing the entire assets of another does or does not, by reason of the purchase, become liable for the other’s debts?`

Answer 248

Generally a corporation purchasing the entire assets of other does not become by reason of the purchase become liable for the other’s debts.

Question 249

Generally a corporation purchasing the entire assets of another does not become by reason of the purchase liable of the other’s debts, unless what?

Answer 249

Unless it agrees to assume them.

Question 250

What may shareholders who are dissatisfied with the terms of a fundamental corporate change usually be permitted to do?

Answer 250

To compel the corporation to buy their shares at a fir value by following a special statutory procedure.

Question 251

What is the appraisal right?

Answer 251

The fair value at which a dissatisfied shareholder is usually permitted to compel the corporation to buy their shares.

Question 252

The appraisal right is generally a shareholder’s exclusive remedy for a completed corporate action absent what?

Answer 252

Absent fraud, misrepresentation, or improper procedure.

Question 253

Does any shareholder entitled to vote on a plan of merger or conversion and shareholders of the subsidiary in a short form merger have the right to dissent?

Answer 253

Any shareholder entitled to vote on a plan of merge tor conversion and shareholders of any subsidiary in a short form merger have the right to dissent.

Question 254

Do shareholders of the corporation whose shares are then acquired in a share exchange have the right to dissent?

Answer 254

Shareholders of the corporation whose shares are then acquired in a share exchange have the right to dissent.

Question 255

Does a shareholder who is entitled to vote on a disposition of all or substantially all the corporation’s property outside the usual and regular course of business entitled to dissent?.

Answer 255

A shareholder who is entitled to vote on a disposition of all or substantially all the corporation’s property outside the usual and regular course of business is entitled to dissent.

Question 256

May a shareholder who’s shares will be reduced to fractional shares by an amendment to the articles and repurchased by the corporation dissent?

Answer 256

A shareholder who’s shares will be reduced to fractional shares by an amendment to the articles and repurchased by the corporation may dissent.

Question 257

May a shareholder dissent with regard to other amendments to the articles of incorporation to the extent provided for in the articles, bylaws, or a board resolution?

Answer 257

A shareholder may dissent with regard to other amendments to the articles of incorporation tot he extent provide for in the articles, bylaws, or a board resolution.

Question 258

Are appraisal rights generally not available for holders of any certain class or series of shares?

Answer 258

Appraisal rights generally are not available for holders of any certain class or series of shares.

Question 259

Appraisal rights generally are not available for holders of any class or series of shares that what or what?

Answer 259

That is trade don a national securities exchange or that has at least 2,000 shareholders and the outstanding shares of the class or series has marked value of at least $10 million (excluding the value of shares held by subsidiaries, senior executives, directors, and beneficial shareholders owning more than 10% of such shares).

Question 260

If an action will be submitted to a vote eat a shareholders’ meeting, the meeting notice must ate what?

Answer 260

Whether the shareholders will be entitled to assert appraisal rights.

Question 261

If appraisal rights are or may be available to a shareholder then what must accompany the meeting notice?

Answer 261

A copy of the relevant statutes.

Question 262

A shareholder who wishes to exercise her appraisal right must what?

Answer 262

Must, before a vote is taken, deliver written notice of her intent to demand payment for her shares if the proposed action is taken.

Question 263

A shareholder who wishes to exercise her appraisal right cannot what?

Answer 263

Cannot vote in favor of the proposed action.

Question 264

If a proposed action is approved at the shareholders’ meeting then the corporation must what?

Answer 264

Notify, within ten days after the vote, all shareholders who filed an intent to demand payment.

Question 265

The notice within ten days after a proposed action is approved at the shareholders’ meeting, to all shareholders who filed an intent to demand payment must what?

Answer 265

Must tell the shareholders when and where they must submit their shares and state the other terms of the repurchase and state the corporation’s estimate of the fair value of the shares and be accompanied by the corporation’s balance sheet and income statement.

Question 266

The corporation needing to make payment of the fair value of the shares cannot set the time for receiving the payment demands when?

Answer 266

Less than 40 days or more than 60 days after the date the corporation’s notice is delivered.

Question 267

A shareholder who is sent a dissenter’s notice must then what?

Answer 267

Demand payment in accordance with the notice given by the corporation.

Question 268

Unless the corporation is insolvent when the proposed action is taken, ti must pay the dissenters what?

Answer 268

The amount that the corporation estimates is the fair value of the shares within 90 days of receipt of the shareholder’s demand.

Question 269

If the shareholder is dissatisfied with the corporation’s determination of value, then she must what?

Answer 269

She must notify the corporation of her estimate of the fair value and demand payment of that estimate plus interest.

Question 270

If the corporation does not want to pay out what a shareholder demands as the fair value of her shares, it must what?

Answer 270

It must file an action in court within 60 days after receiving the shareholder’s demand, requesting the court to determine the fair value of the shares.

Question 271

If the corporation does not commence the proceeding for investigation into the fair value of shares within 60 days of receiving shareholder’s demand, any shareholder who made demand can what?

Answer 271

Can file suit on behalf of the corporation.

Question 272

The corporation must pay the amount determined to be the fair value of shares by the court within how may days after a final determination by the court.

Answer 272

Within ten days after a final determination by the court.

Question 273

What is dissolution?

Answer 273

Dissolution is the legal termination of the corporate entity.

Question 274

What is liquidation?

Answer 274

Liquidation is the process of marshaling a corporation’s assets, paying all its debts, and distributing the residual property or proceeds, if any, to the shareholders.

Question 275

When may a corporation voluntarily liquidate and dissolve?

Answer 275

At any time without judicial supervision.

Question 276

When must notice be given to all known creditors of a corporation?

Answer 276

When a corporation voluntarily liquidates and dissolves.

Question 277

In Florida,the article of dissolution are not filed until when?

Answer 277

Until the liquidation has been completed.

Question 278

Any shareholder can bring an action to have the corporation what?

Answer 278

Involuntarily liquidated.

Question 279

To have the corporation involuntarily liquidated and dissolved, what?

Answer 279

The corporation is threatened with irreparable injury and there is a deadlock of the directors or the shareholders are deadlocked and unable to elect successor directors.

Question 280

A shareholder or group of shareholders in a corporation having 35 or fewer shareholders can bring an action to have the corporation dissolve dif what?

Answer 280

If there is waste or misappropriation of the corporate assets or th redirectors or those involved int eh control of the corporation are acting will act or have acted illegally or fraudulently.

Question 281

Involuntary liquidation is discretionary with the court and usually what?

Answer 281

Usually will not be granted unless it is necessary to prevent irreparable injury and is in the best interest of th corporation and of the shareholders as a whole.

Question 282

Unsatisfied judgment creditors may what?

Answer 282

Sue to liquidate an insolvent corporation.

Question 283

The state may seek involuntary administrative dissolution of a corporation of what?

Answer 283

For fraud, illegality, abuse of corporate powers or failure to file an annual reporter or appoint a resisted agent.

Question 284

In an action for dissolution the court has alternative remedies that it may impose instead of dissolution such as what?

Answer 284

Such as appointment of a receiver or provisional director.

Question 285

After dissolution, a claim my be entered against the corporation to the extent of what?

Answer 285

To the extent of its undistributed assets.

Question 286

If the corporation’s assets have been distorted in liquidation then what?

Answer 286

Then a claim may be entered against a shareholder to the extent to the shareholder’s pro rate share of the claim or the corporate assets distributed to the shareholder in liquidation, whichever is less.

Question 287

How may a corporation limit its liability for claims after dissolution?

Answer 287

It may file a notice of dissolution with the department of state and require that persons with claims that are not known present them in accordance with the notice or within ten days after adopting the articles of dissolution publish a notice of corporate dissolution once a week for two consecutive weeks.

Question 288

The notice of corporate dissolution once a week for tow consecutive weeks should be in a newspaper of what or Florida county in which what or if none, in a Florida county in which what?

Answer 288

In a newspaper of general circulation in a Florida county in which the corporation has its principal office or if none in a Florida county in which the corporation owns real or personal property.

Question 289

Notice after dissolution in order to limit the liability of the corporation to claims, must what?

Answer 289

Must provide a mailing address to which the claim may be sent and state that a claim will be bared unless processing to enforce the claim is commenced within four years.

Question 290

The Florida state for proceedings after dissolution provides that dissolution what?

Answer 290

That dissolution shall not impair any remedy averrable to or against the corporation if action is commenced within three years after dissolution.

Question 291

The Florida statute for proceedings after dissolution proved that dissolution what?

Answer 291

That dissolution shall not impair any remedy available to or against any claims by or against any officer director or shareholder.

Question 292

By what do the directors at the time of dissolution become trustees for any proper owned or thereafter acquired by the dissolved corporation and continue as such for three years or for such longer period as any real property is held of record by the dissolved corporation?

Answer 292

By operation of law.

Question 293

An affilitated transaction with an interested shareholder owning more than 10% of the corporation’s shares must also be approved by who?

Answer 293

By a majority of the corporation’s disinterested directors or two thirds vote of the disinterred shareholders unless the consideration to be received by the remaining public shareholders is far or another exception is met.

Question 294

A Florida corporation may opt out of such requirements by what?

Answer 294

By charter or by bylaw amendment.

Question 295

The affiliated transactions statute is inapplicable to corporation with what?

Answer 295

With fewer than 300 shareholders.

Question 296

What is a business trust?

Answer 296

A common law form of business association based on the trust concept and governed in large part by trust law.

Question 297

Is th validity of business trusts recognized by Florida statute?

Answer 297

The validity of business trusts is recognized by Florida statute.

Question 298

Are business trusts deemed legal entities for most purposes in Florida?

Answer 298

Business trusts are not deemed legal entity for most purposes in Florida.

Question 299

Business trust are not deemed legal entities for most purposes in Florida, except?

Answer 299

Except under federal bankruptcy law.

Question 300

May a business trust engage in banking or a security business?

Answer 300

Business trust may not engage in banking or a security business.

Question 301

A business trust is created by what?

Answer 301

By a deed or deflation of just which must be filed with the secretary of state before any business can be legally transacted.

Question 302

The settlor transfers th assets of the business enterprise to trustees, who do what?

Answer 302

Manage it for beneficiaries usually called shareholders.

Question 303

Beneficiary shareholders are issued what?

Answer 303

Transferable certifictes evidencing their interest.

Question 304

the trustees may be held personally liable to trust creditors and are the proper what?

Answer 304

Parties for suits by tor against th trust.

Question 305

Are shareholders generally held liable?

Answer 305

Shareholders generally are not held liable.

Question 306

For Federal income tax purposes, business trusts are usually classified as what?

Answer 306

As associations and thus taxed as corporations.

Question 307

Special rules apply to what investment trusts to eliminate th double taxation effect?

Answer 307

To real estate investment trusts.

Question 308

For state ad valorem tax purposes, shares of a business trust are considered what?

Answer 308

Personal property.

Question 309

MOst dtates pronibit professionals form what?

Answer 309

Forming general corporations fo rt. purpose of practicing their professions.

Question 310

Why do most states prohibit professionals from forming general corporations of the purpose of processing their professions?

Answer 310

The idea that professionals should not be able to avoid personal liability for their own malpractice by hiding behind th corporate veil.

Question 311

Florida began to adopt special statutes permitting professionals o incorporate so that they could take advantage of what?

Answer 311

Of certain federal tax provision that were available only to corporations.

Question 312

Florida’s professional corporation special statutes generally treat professional corporation like what?

Answer 312

Like an other corporation but limit share ownership to licensed professionals and make it clear th a professional practicing in the corporation will still be personally liable for his own malpractice despite the corporate form.

Question 313

What is a not for profit corporation?

Answer 313

One that doe snot distribute income to its members directors or officers.

Question 314

What purpose may a not for profit be organized for?

Answer 314

Any lawful purpose other than pecuniary gain (charitable benevolent, educational, religious, social, athletic, scientific, and trade association purposes).

Question 315

Articles of incorporation for a not for profit in Florida are the same as the requirements for corporations except what?

Answer 315

Except a not for profit’s articles of incorporation must also set forth the corporation’s purpose in order to have formation.

Question 316

Do not for profits need to have members?

Answer 316

Not for profits may but need not have members.

Question 317

Do members of not for profits have voting rights?

Answer 317

Members of not for profits have no voting or other rights except as provided in the articles of incorporation or bylaws.

Question 318

Are members of a not for profit personally liable for corporate obligations?

Answer 318

Members of a not for profit are not personally liable for corporate obligations.

Question 319

May members of a not for profit generally be paid any part of the income of the corporation?

Answer 319

Members of a not for profit generally may not be paid any part of the income of the corporation.

Question 320

Members of a not for profit generally may not be paid any part of the income of the corporation, although what?

Answer 320

Although members may be paid reasonable compensation for their services.

Question 321

A board of directors for a not for profit must consist of what?

Answer 321

Three or more individuals with the number specified in or fixed in accordance with the articles of incorporation or the bylaws.

Question 322

May a not for profit generally make loans to its directors?

Answer 322

A not fo profit generally may not make loans to its directors.

Question 323

May the directors of a not for profit be removed from office with or without cause by the vote of the members like directors for a for profit corporation?

Answer 323

Directors of a not for profit may be removed from office with or without cause by the vote of the members like directors of a for profit corporation.

Question 324

What must a plan for the distribution of assets for a not for profit provide?

Answer 324

A plan for the distribution of assets for a not for profit must provide that all obligations and liabilities be paid, all assets be returned or donated to similar charity if held of such condition and all other assets be distributed as provided in the article of incorporation or bylaws, which may provide for the distribution to the members or other charities.

Question 325

Foreign corporations must be what to do business within Florida?

Answer 325

Qualified or authorized.

Question 326

The formalities for foreign corporations are similar to what?

Answer 326

To those for incorporation.

Question 327

Foreign corporations must do what three things?

Answer 327

Maintain a registered office in the state, appoint a registered agent, and file an annual report.

Question 328

Does the state regulate the internal affairs of foreign corporations?

Answer 328

The state does not regulate the internal affairs of foreign corporations.

Question 329

Foreign corporations that transact business in Florida without authority may not what but may what?

Answer 329

May not sue in Florida courts but they may defend.

Question 330

Are the contracts of foreign corporations that transact business in Florida without authority impaired?

Answer 330

The contracts are not impaired.

Question 331

May the state sue to recover the amount of all fees and taxes that would have been due upon qualification plus a forfeiture of $500-$1,000 per year in which the foreign corporation failed to qualify?

Answer 331

The state may sue to recover the amount of all fees and taxes that would have been due upon qualification plus a forfeiture of $500-$1,000 per year in which the foreign corporation failed to qualify.

Question 332

How may process be served on various officers and agents in Florida corporations?

Answer 332

President, to any officer or business gent residing in the state.

Question 333

May process always be served on a corporation’s registered agent?

Answer 333

Process may always be served on a corporation’s registered agent.

Question 334

What happens if service cannot be made on a corporation’s registered agent because of the corporations failure to comply with all statutory requirements?

Answer 334

Then service may be made on any employee at the corporation’s place of business.

Question 335

When is service by publication permitted for a corporation?

Answer 335

Only where it is not possible to serve any eligible officers or agents within or outside the sate because they cannot be found, conceal themselves, or are unknown.

Question 336

What permits a state to exercise in personam jurisdiction over any foreign corporation which has sufficient minimum contacts with the state such that suit there does not offend traditional notions of fair play and substantial justice?

Answer 336

Constitutional due process.

Question 337

Florida’s long arm statute asserts jurisdiction over what?

Answer 337

Over any corporation that operates or conducts a business or business venture in Florida or that has an office or agency in the state.

Question 338

Is jurisdiction over corporations still limited to actions raising from or connected with such business?

Answer 338

No.

Question 339

Full plenary jurisdiction is asserted over what?

Answer 339

Over any corporation actually conducting business from an office in the state or engaging in substantial activities in Florida.

Question 340

Who may process on a foreign corporation be served on?

Answer 340

On any agent transacting business in the state of Florida as well as on the same officers and agents as for domestic corporations.

Question 341

What happens if a foreign corporation has no resident officer or registered agent in Florida in relation to service of process?

Answer 341

Substituted service may be made on the secretary of state or personally outside the state.